07 January 2009 17:06 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS news)--European polyethylene (PE) players are treading carefully into January in an uncertain situation where rules are being re-written and few are willing to commit themselves, market sources said on Wednesday.
There was not the certainty of a quarterly ethylene price for buyers to hang on to and producers were careful not to run their facilities too hard in case demand did not come back as well as they hoped.
“The market has got the jitters at the moment,” said one large buyer. “Everybody is looking over their shoulder.”
Market intelligence was patchy as many players were only just returning after holidays, but there was a sense of insecurity as players tentatively aired their views.
Several PE producers had announced increases for January, and while most converters had not expected to pay more in January there was no sign of lower prices so far. Some sources even reported higher prices at low-priced accounts.
Spot numbers for low density polyethylene (LDPE) in ?xml:namespace>
Commodity grades in particular were sometimes scarce, mainly due to hefty cutbacks in place at most European PE production units. One PE producer continued to run assets at 50% in January.
“There is not a good general availability of LDPE commodity grades at the moment,” reported an LDPE buyer. “Nobody in their right mind will be selling below market value. The silly season has gone.”
This was a reference to fourth quarter PE business in
There was no quarterly ethylene settlement for the first quarter of 2009 yet, and it was not clear if one would be settled. PE players were still working on the new January contract of €520/tonne FD NWE, a number which represented a record drop of 54% from the last contract price.
This added to the downstream uncertainty felt in the PE market.
Most players intended to wait a few days until the market got back to a semblance of normality after the holidays before doing business.
“We will be aiming to retain margin rather than go for volumes,” said one major producer who was now running assets at 75-80% of capacity.
“There is no point running flat out if the market is still weak,” said another whose plants were still reduced after a poor quarter four.
Another element which added to the nervousness of the PE market was the uncertainty of major supplier LyondellBasell’s situation. The company filed for bankruptcy protection of its
PE producers in
($1 = €0.74)
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